1-1

Accounting in Action

Learning Objectives

1-2

Identify the activities and users associated with accounting.

Explain the building blocks of accounting: ethics, principles, and

assumptions.

State the accounting equation, and define its components.

Analyze the effects of business transactions on the accounting

equation.

Describe the four financial statements and how they are

prepared.

LEARNING
OBJECTIVE

Identify the activities and users

associated with accounting.

Accounting consists of three basic activitiesit

identifies,

records, and

communicates

the economic events of an organization to interested users.

1-3

LO 1

Three Activities
Illustration 1-1
The activities of the accounting process

The accounting process includes

the bookkeeping function.

1-4

LO 1

Who Uses Accounting Data

INTERNAL
USERS

Illustration 1-2
Questions that internal
users ask

1-5

LO 1

1-6

LO 1

Who Uses Accounting Data

EXTERNAL
USERS

1-7

Illustration 1-3
Questions that external
users ask

LO 1

DO IT! 1

Basic Concepts

Indicate whether the following statements are true or false.

1. The three steps in the accounting process are identification,
recording, and communication.
2. Bookkeeping encompasses all steps in the accounting process.
3. Accountants prepare, but do not interpret, financial reports.
4. The two most common types of external users are investors and
company officers.
5. Managerial accounting activities focus on reports for internal users.

Solution: 1. True
2. 3. 4. False
5.
1-8

False

False

True
LO 1

LEARNING
OBJECTIVE

Explain the building blocks of accounting:

ethics, principles, and assumptions.

Ethics in Financial Reporting

Recent financial scandals include: Enron, WorldCom,

HealthSouth, AIG, and other companies.

Regulators and lawmakers concerned that economy would

suffer if investors lost confidence in corporate accounting. In
response,

1-9

Congress passed Sarbanes-Oxley Act (SOX).

Effective financial reporting depends on sound ethical

behavior.

LO 2

Ethics in Financial Reporting

Illustration 1-4
Steps in analyzing ethics cases
and situations
1-10

LO 2

Ethics in Financial Reporting

Question
Ethics are the standards of conduct by which one's actions
are judged as:
a. right or wrong.
b. honest or dishonest.
c. fair or not fair.
d. all of these options.

1-11

LO 2

1-12

LO 2

Generally Accepted Accounting Principles

Various users
need financial
information

Financial Statements

The accounting profession

has developed standards
that are generally accepted
and universally practiced.

1-13

Balance
Balance Sheet
Sheet
Income
Income Statement
Statement
Statement
Statement of
of Owner's
Owner's Equity
Equity
Statement
Statement of
of Cash
Cash Flows
Flows
Note
Note Disclosure
Disclosure

Generally Accepted
Accounting
Principles (GAAP)

LO 2

Generally Accepted Accounting Principles

Generally Accepted Accounting Principles (GAAP) Standards
that are generally accepted and universally practiced. These
standards indicate how to report economic events.
Standard-setting bodies:

1-14

Financial Accounting Standards

Board (FASB)

Securities and Exchange

Commission (SEC)

International Accounting
Standards Board (IASB)
LO 2

Measurement Principles
HISTORICAL COST PRINCIPLE (or cost principle) dictates
that companies record assets at their cost.

FAIR VALUE PRINCIPLE states that assets and liabilities

should be reported at fair value (the price received to sell an asset
or settle a liability).
Selection of which principle to follow
generally relates to trade-offs
between relevance and faithful
representation.

1-15

LO 2

Assumptions
MONETARY UNIT ASSUMPTION requires that companies
include in the accounting records only transaction data that can
be expressed in terms of money.

ECONOMIC ENTITY ASSUMPTION requires that activities of

the entity be kept separate and distinct from the activities of its
owner and all other economic entities.

1-16

Proprietorship

Partnership

Corporation

Forms of Business
Ownership

LO 2

Forms of Business Ownership

Proprietorship

Owned by one
person

Owned by two or
more persons

Owner is often
manager/operator

Often retail and

service-type
businesses

1-17

Partnership

Owner receives
any profits, suffers
any losses, and is
personally liable
for all debts

Generally
unlimited
personal liability

Corporation

Ownership
divided into
shares of stock

Separate legal
entity organized
under state
corporation law

Limited liability

Partnership
agreement

LO 2

Assumptions
Question
Combining the activities of Kellogg and General Mills
would violate the
a. cost principle.
b. economic entity assumption.
c. monetary unit assumption.
d. ethics principle.

1-18

LO 2

Assumptions
Question
A business organized as a separate legal entity under state
law having ownership divided into shares of stock is a
a. proprietorship.
b. partnership.
c. corporation.
d. sole proprietorship.

1-19

LO 2

DO IT!

Building Blocks of Accounting

Indicate whether each of the following statements presented

below is true or false.

1-20

1.

Congress passed the Sarbanes-Oxley Act to reduce

unethical behavior and decrease the likelihood of
future corporate scandals.

True

2.

The primary accounting standard-setting body in the

United States is the Financial Accounting Standards
Board (FASB).

True

3.

The historical cost principle dictates that companies

record assets at their cost. In later periods, however,
the fair value of the asset must be used if fair value is
higher than its cost.

False

LO 2

DO IT!

Building Blocks of Accounting

Indicate whether each of the following statements presented

below is true or false.

1-21

4.

Relevance means that financial information matches

what really happened; the information is factual.

False

5.

A business owners personal expenses must be

separated from expenses of the business to comply
with accountings economic entity assumption.

True

LO 2

LEARNING
OBJECTIVE

Assets

State the accounting equation, and define

its components.

Liabilities

Owner's
Equity

Basic Accounting Equation

1-22

Provides the underlying framework for recording and

summarizing economic events.

Assets are claimed by either creditors or owners.

If a business is liquidated, claims of creditors must be paid

before ownership claims.

LO 3

Basic Accounting Equation

Assets

Liabilities

Owner's
Equity

Assets

1-23

Resources a business owns.

Provide future services or benefits.

Cash, Supplies, Equipment, etc.

LO 3

Basic Accounting Equation

Assets

Liabilities

Owner's
Equity

Liabilities

1-24

Claims against assets (debts and obligations).

Creditors (party to whom money is owed).

Accounts Payable, Notes Payable, Salaries and Wages

Payable, etc.

LO 3

Basic Accounting Equation

Assets

Liabilities

Owner's
Equity

Owner's Equity

1-25

Ownership claim on total assets.

Referred to as residual equity.

Investment by owners and revenues (+)

Drawings and expenses (-).

LO 3

Owners Equity

Illustration 1-6
Expanded accounting
equation

Increases in Owners Equity

Investments by owner are the assets the owner puts into the
business.

Revenues result from business activities entered into for the

purpose of earning income.

Common sources of revenue are: sales, fees, services,

commissions, interest, dividends, royalties, and rent.

1-26

LO 3

Owners Equity

Illustration 1-6
Expanded accounting
equation

Decreases in Owners Equity

Drawings An owner may withdraw cash or other assets for

personal use.

Expenses are the cost of assets consumed or services used in

the process of earning revenue.

Common expenses are: salaries expense, rent expense,

utilities expense, tax expense, etc.

1-27

LO 3

DO IT!

Owner's Equity Effects

Classify the following items as investment by owner, owners

drawings, revenue, or expenses. Then indicate whether each
item increases or decreases owners equity.
Classification

Effect on Equity

1. Rent Expense

Expense

Decrease

2. Service Revenue

Revenue

Increase

3. Drawings

Drawings

Decrease

Expense

Decrease

4. Salaries and Wages

Expense
1-28

LO 3

LEARNING
OBJECTIVE

Analyze the effects of business transactions

on the accounting equation.

Transactions are a businesss economic events recorded

by accountants.

1-29

May be external or internal.

Not all activities represent transactions.

Each transaction has a dual effect on the accounting

equation.

LO 4

Transaction Analysis
Illustration: Are the following events recorded in the accounting
records?
Illustration 1-7

Event

Criterion

Purchase
computer

Discuss product
design with
potential customer

Pay rent

Is the financial position (assets, liabilities, or

owners equity) of the company changed?

Record/
Dont Record

1-30

LO 4

Transaction Analysis
TRANSACTION 1. INVESTMENT BY OWNER Ray Neal decides to start a
smartphone app development company which he names Softbyte. On
September 1, 2017, he invests $15,000 cash in the business. This
transaction results in an equal increase in assets and owners equity.
Assets
Transaction

1.

Cash

= Liabilities +

Owner's Equity

Accounts
Accounts
Owner's
Owner's
+ Supplies +Equipment =
+
+ Rev.
Receivable
Payable
Capital
Drawings

+15,000

- Exp.

+15,000

Illustration 1-8
Tabular summary of
Softbyte transactions

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LO 4

TRANSACTION 2. PURCHASE OF EQUIPMENT FOR CASH Softbyte

Inc. purchases computer equipment for $7,000 cash.
Illustration 1-8

Assets
Transaction

Cash

1.

+15,000

2.

-7,000

+7,000
+1,600

+1,600

+1,200

+1,200
+250

6.

+1,500

7.

-1,700

8.

-250

9.

+600

10.

-1,300
$8,050 +

- Exp.

+15,000

5.

1-32

Owner's Equity

Accounts
Accounts
Owner's
Owner's
+ Supplies +Equipment =
+
+ Rev.
Receivable
Payable
Capital
Drawings

3.
4.

= Liabilities +

+2,000

-250
+3,500
-600
-900
-200

-250
-600
-1,300
$1,400 + $1,600 +

$7,000

$1,600 + $15,000 + $4,700 - $1,950 - $1,300

LO 4

TRANSACTION 3. PURCHASE OF SUPPLIES ON CREDIT Softbyte Inc.

purchases for $1,600 headsets and other accessories expected to last
several months. The supplier allows Softbyte to pay this bill in October.
Illustration 1-8
Transaction

Cash

Assets
+

1.

+15,000

2.

-7,000

+7,000
+1,600

+1,600

+1,200

+1,200
+250

6.

+1,500

7.

-1,700

8.

-250

9.

+600

10.

-1,300
$8,050 +

- Exp.

+15,000

5.

1-33

Owner's Equity

Accounts
Accounts
Owner's
Owner's
+ Supplies +Equipment =
+
+ Rev.
Receivable
Payable
Capital
Drawings

3.
4.

= Liabilities +

+2,000

-250
+3,500
-600
-900
-200

-250
-600
-1,300
$1,400 + $1,600 +

$7,000

$1,600 + $15,000 + $4,700 - $1,950 - $1,300

LO 4

TRANSACTION 4. SERVICES PERFORMED FOR CASH Softbyte Inc.

receives $1,200 cash from customers for app development services it has
performed.
Illustration 1-8
Assets
Transaction

Cash

1.

+15,000

2.

-7,000

+7,000
+1,600

+1,600

+1,200

+1,200
+250

6.

+1,500

7.

-1,700

8.

-250

9.

+600

10.

-1,300
$8,050 +

- Exp.

+15,000

5.

1-34

Owner's Equity

Accounts
Accounts
Owner's
Owner's
+ Supplies +Equipment =
+
+ Rev.
Receivable
Payable
Capital
Drawings

3.
4.

= Liabilities +

+2,000

-250
+3,500
-600
-900
-200

-250
-600
-1,300
$1,400 + $1,600 +

$7,000

$1,600 + $15,000 + $4,700 - $1,950 - $1,300

LO 4

TRANSACTION 5. PURCHASE OF ADVERTISING ON CREDIT Softbyte

Inc. receives a bill for $250 from the Daily News for advertising on its
online website but postpones payment until a later date.
Illustration 1-8
Assets
Transaction

Cash

1.

+15,000

2.

-7,000

+7,000
+1,600

+1,600

+1,200

+1,200
+250

6.

+1,500

7.

-1,700

8.

-250

9.

+600

10.

-1,300
$8,050 +

- Exp.

+15,000

5.

1-35

Owner's Equity

Accounts
Accounts
Owner's
Owner's
+ Supplies +Equipment =
+
+ Rev.
Receivable
Payable
Capital
Drawings

3.
4.

= Liabilities +

+2,000

-250
+3,500
-600
-900
-200

-250
-600
-1,300
$1,400 + $1,600 +

$7,000

$1,600 + $15,000 + $4,700 - $1,950 - $1,300

LO 4

TRANSACTION 6. SERVICES PERFORMED FOR CASH AND CREDIT.

Softbyte performs $3,500 of services. The company receives cash of
$1,500 from customers, and it bills the balance of $2,000 on account.
Illustration 1-8
Transaction

Cash

Assets
+

1.

+15,000

2.

-7,000

+7,000
+1,600

+1,600

+1,200

+1,200
+250

6.

+1,500

7.

-1,700

8.

-250

9.

+600

10.

-1,300
$8,050 +

- Exp.

+15,000

5.

1-36

Owner's Equity

Accounts
Accounts
Owner's
Owner's
+ Supplies +Equipment =
+
+ Rev.
Receivable
Payable
Capital
Drawings

3.
4.

= Liabilities +

+2,000

-250
+3,500
-600
-900
-200

-250
-600
-1,300
$1,400 + $1,600 +

$7,000

$1,600 + $15,000 + $4,700 - $1,950 - $1,300

LO 4

TRANSACTION 7. PAYMENT OF EXPENSES Softbyte Inc. pays the

following expenses in cash for September: office rent $600, salaries and
wages of employees $900, and utilities $200.
Illustration 1-8
Assets
Transaction

Cash

1.

+15,000

2.

-7,000

+7,000
+1,600

+1,600

+1,200

+1,200
+250

6.

+1,500

7.

-1,700

8.

-250

9.

+600

10.

-1,300
$8,050 +

- Exp.

+15,000

5.

1-37

Owner's Equity

Accounts
Accounts
Owner's
Owner's
+ Supplies +Equipment =
+
+ Rev.
Receivable
Payable
Capital
Drawings

3.
4.

= Liabilities +

+2,000

-250
+3,500
-600
-900
-200

-250
-600
-1,300
$1,400 + $1,600 +

$7,000

$1,600 + $15,000 + $4,700 - $1,950 - $1,300

LO 4

TRANSACTION 8. PAYMENT OF ACCOUNTS PAYABLE Softbyte Inc.

pays its $250 Daily News bill in cash. The company previously (in
Transaction 5) recorded the bill as an increase in Accounts Payable.
Illustration 1-8
Transaction

Cash

Assets
+

1.

+15,000

2.

-7,000

+7,000
+1,600

+1,600

+1,200

+1,200
+250

6.

+1,500

7.

-1,700

8.

-250

9.

+600

10.

-1,300
$8,050 +

- Exp.

+15,000

5.

1-38

Owner's Equity

Accounts
Accounts
Owner's
Owner's
+ Supplies +Equipment =
+
+ Rev.
Receivable
Payable
Capital
Drawings

3.
4.

= Liabilities +

+2,000

-250
+3,500
-600
-900
-200

-250
-600
-1,300
$1,400 + $1,600 +

$7,000

$1,600 + $15,000 + $4,700 - $1,950 - $1,300

LO 4

TRANSACTION 9. RECEIPT OF CASH ON ACCOUNT Softbyte Inc.

receives $600 in cash from customers who had been billed for services
(in Transaction 6).
Illustration 1-8
Assets
Transaction

Cash

1.

+15,000

2.

-7,000

+7,000
+1,600

+1,600

+1,200

+1,200
+250

6.

+1,500

7.

-1,700

8.

-250

9.

+600

10.

-1,300
$8,050 +

- Exp.

+15,000

5.

1-39

Owner's Equity

Accounts
Accounts
Owner's
Owner's
+ Supplies +Equipment =
+
+ Rev.
Receivable
Payable
Capital
Drawings

3.
4.

= Liabilities +

+2,000

-250
+3,500
-600
-900
-200

-250
-600
-1,300
$1,400 + $1,600 +

$7,000

$1,600 + $15,000 + $4,700 - $1,950 - $1,300

LO 4

TRANSACTION 10. WITHDRAWAL OF CASH BY OWNER Ray Neal

withdraws $1,300 in cash in cash from the business for his personal use.
Illustration 1-8
Transaction

Cash

Assets
+

1.

+15,000

2.

-7,000

+7,000
+1,600

+1,600

+1,200

+1,200
+250

6.

+1,500

7.

-1,700

8.

-250

9.

+600

10.

-1,300
$8,050 +

- Exp.

+15,000

5.

1-40

Owner's Equity

Accounts
Accounts
Owner's
Owner's
+ Supplies +Equipment =
+
+ Rev.
Receivable
Payable
Capital
Drawings

3.
4.

= Liabilities +

-250

+2,000

+3,500
-600
-900
-200
-250

-600
-1,300
$1,400 + $1,600 +

$18,050

$7,000

$1,600 + $15,000 - $1,300 + $4,700 - $1,950

$18,050

LO 4

Summary of Transactions
1. Each transaction is analyzed in terms of its effect on:
a. The three components of the basic accounting
equation.
b. Specific of items within each component.
2. The two sides of the equation must always be equal.

1-41

LO 4

DO IT!

Tabular Analysis

Transactions made by Virmari & Co., a public accounting firm, for

the month of August are shown below. Prepare a tabular analysis
which shows the effects of these transactions on the expanded
accounting equation, similar to that shown in Illustration 1-8.
1. The owner invested $25,000 cash in the business.
2. The company purchased $7,000 of office equipment on credit.
3. The company received $8,000 cash in exchange for services
performed.
4. The company paid $850 for this months rent.
5. The owner withdrew $1,000 cash for personal use.

1-42

LO 4

DO IT!

Tabular Analysis

1. The owner invested $25,000 cash in the business.

Transaction
1.

Assets

+ Equipment

Cash

Accounts
Payable

+25,000

2.
+8,000

4.

-850

5.

-1,000
$31,150 +

Owner's Equity
Owner's
Owner's
+ Rev.
Capital
Drawings

- Exp.

+25,000
+7,000

3.

1-43

Liabilities +

+7,000
+8,000
-850
-1,000

$7,000

$18,050

$7,000

$25,000 + $8,000 -

$18,050

$850 - $1,000

LO 4

DO IT!

Tabular Analysis

2. The company purchased $7,000 of office equipment on credit.

Transaction
1.

Assets

+ Equipment

Cash

Accounts
Payable

+25,000

2.
+8,000

4.

-850

5.

-1,000
$31,150 +

Owner's Equity
Owner's
Owner's
+ Rev.
Capital
Drawings

- Exp.

+25,000
+7,000

3.

1-44

Liabilities +

+7,000
+8,000
-850
-1,000

$7,000

$18,050

$7,000

$25,000 + $8,000 -

$18,050

$850 - $1,000

LO 4

DO IT!

Tabular Analysis

3. The company received $8,000 cash in exchange for services

performed.
Transaction
1.

Assets

+ Equipment

Cash

Accounts
Payable

+25,000

2.
+8,000

4.

-850

5.

-1,000
$31,150 +

Owner's Equity
Owner's
Owner's
+ Rev.
Capital
Drawings

- Exp.

+25,000
+7,000

3.

1-45

Liabilities +

+7,000
+8,000
-850
-1,000

$7,000

$18,050

$7,000

$25,000 + $8,000 -

$18,050

$850 - $1,000

LO 4

DO IT!

Tabular Analysis

4. The company paid $850 for this months rent.

Transaction
1.

Assets

+ Equipment

Cash

Accounts
Payable

+25,000

2.
+8,000

4.

-850

5.

-1,000
$31,150 +

Owner's Equity
Owner's
Owner's
+ Rev.
Capital
Drawings

- Exp.

+25,000
+7,000

3.

1-46

Liabilities +

+7,000
+8,000
-850
-1,000

$7,000

$18,050

$7,000

$25,000 + $8,000 -

$18,050

$850 - $1,000

LO 4

DO IT!

Tabular Analysis

5. The owner withdrew $1,000 cash for personal use.

Transaction
1.

Assets

+ Equipment

Cash

Accounts
Payable

+25,000

2.
+8,000

4.

-850

5.

-1,000
$31,150 +

Owner's Equity
Owner's
Owner's
+ Rev.
Capital
Drawings

- Exp.

+25,000
+7,000

3.

1-47

Liabilities +

+7,000
+8,000
-850
-1,000

$7,000

$38,150

$7,000

$25,000 -

$1,000

$38,150

+ $8,000 -

$850

LO 4

LEARNING
OBJECTIVE

Describe the four financial statements

and how they are prepared.

Companies prepare four financial statements :

Income
Statement

1-48

Owners
Equity
Statement

Balance
Sheet

Statement
of Cash
Flows

LO 5

Financial Statements
Question
Net income will result during a time period when:
a. assets exceed liabilities.
b. assets exceed revenues.
c. expenses exceed revenues.
d. revenues exceed expenses.

1-49

LO 5

Financial Statements

Net income is needed to determine the

ending balance in owners equity.

SOFTBYTE
Income Statement
For the Month Ended September 30, 2017

Illustration 1-9
Financial statements and
their interrelationships

SOFTBYTE
Owners Equity Statement
For the Month Ended September 30, 2017

1-50

LO 5

SOFTBYTE
Owners Equity Statement
For the Month Ended September 30, 2017

The ending
balance in
owners equity
is needed in
preparing the
balance sheet.

Illustration 1-9
Financial statements
and their
interrelationships

1-51

Illustration 1-9

SOFTBYTE
Balance Sheet
September 30, 2017

Financial
Statements

SOFTBYTE
Balance Sheet
September 30, 2017

Balance sheet and

income statement
are needed to
prepare statement of
cash flows.
SOFTBYTE
Statement of Cash Flows
For the Month Ended September 30, 2017

Illustration 1-9
Financial statements
and their
interrelationships

1-52

Income Statement

1-53

Reports the revenues and expenses for a specific

period of time.

Lists revenues first, followed by expenses.

Shows net income (or net loss).

Does not include

investment and
withdrawal transactions
between the owner and
the business in
measuring net income.
LO 5

Owners Equity Statement

1-54

Reports the changes in owners equity for a specific

period of time.

The time period is the same as that covered by the

income statement.

LO 5

Balance Sheet

1-55

Reports the assets, liabilities, and owner's equity at a

specific date.

Lists assets at the top, followed by liabilities and owners

equity.

Total assets must equal total liabilities and owner's

equity.

Is a snapshot of the companys financial condition at a

specific moment in time (usually the month-end or yearend).

LO 5

Statement of Cash Flows

1-56

Information on the cash receipts and payments for a

specific period of time.

Answers the following:

Where did cash come from?

What was cash used for?

What was the change in the

cash balance?

LO 5

Financial Statements
Question
Which of the following financial statements is prepared as
of a specific date?
a. Balance sheet.
b. Income statement.
c. Owner's equity statement.
d. Statement of cash flows.

1-57

LO 5

1-58

LO 5

DO IT!

Financial Statement Items

Presented below is selected information related to Flanagan Company

at December 31, 2017. Flanagan reports financial information monthly.
Equipment
Cash
Service Revenue
Rent Expense
Accounts Payable

$10,000
8,000
36,000
11,000
2,000

Utilities Expense
Accounts Receivable
Salaries and Wages Expense
Notes Payable
Owners Drawings

$ 4,000
9,000
7,000
16,500
5,000

(a) Determine the total assets of at December 31, 2017.

(b) Determine the net income reported for December 2017.
(c) Determine the owners equity at December 31, 2017.

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LO 5

DO IT!

Financial Statement Items

Presented below is selected information related to Flanagan Company

at December 31, 2017. Flanagan reports financial information monthly.
Equipment
Cash
Service Revenue
Rent Expense
Accounts Payable

$10,000
8,000
36,000
11,000
2,000

Utilities Expense
Accounts Receivable
Salaries and Wages Expense
Notes Payable
Owners Drawings

$ 4,000
9,000
7,000
16,500
5,000

(a) Determine the total assets of at December 31, 2017.

The total assets are $27,000, comprised of

1-60

Cash $8,000,

Accounts Receivable $9,000, and

Equipment $10,000.
LO 5

DO IT!

Financial Statement Items

Presented below is selected information related to Flanagan Company

at December 31, 2017. Flanagan reports financial information monthly.
Equipment
Cash
Service Revenue
Rent Expense
Accounts Payable

$10,000
8,000
36,000
11,000
2,000

Utilities Expense
Accounts Receivable
Salaries and Wages Expense
Notes Payable
Owners Drawings

$ 4,000
9,000
7,000
16,500
5,000

(b) Determine the net income reported for December 2017.

1-61

LO 5

DO IT!

Financial Statement Items

Presented below is selected information related to Flanagan Company

at December 31, 2017. Flanagan reports financial information monthly.
Equipment
Cash
Service Revenue
Rent Expense
Accounts Payable

$10,000
8,000
36,000
11,000
2,000

Utilities Expense
Accounts Receivable
Salaries and Wages Expense
Notes Payable
Owners Drawings

$ 4,000
9,000
7,000
16,500
5,000

(c) Determine the owners equity at December 31, 2017.

1-62

LO 5

LEARNING
OBJECTIVE

APPENDIX 1A: Explain the career

opportunities in accounting.

Public Accounting
Careers in auditing, taxation,
and management consulting
serving the general public.

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Private Accounting
Careers in industry working in
cost accounting, budgeting,
accounting information systems,
and taxation.

Governmental Accounting

Forensic Accounting

Careers with the IRS, the FBI,

the SEC, public colleges and
universities, and in state and
local governments.

Uses accounting, auditing, and

investigative skills to conduct
investigations into theft and
fraud.
LO 6

Show Me the Money

Salary estimates for jobs in public and corporate accounting
Illustration 1A-1

Upper-level management salaries in corporate accounting

Illustration 1A-2

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LO 6